Post on 22-Jun-2020
iress.com
Eugene van Rensburg
Head: Wealth Management SA
21 June 2016
The Rise of the Robo-AdvisorA threat or an opportunity to the financial advice industry?
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Financial Services Industry Trends
“
”
Convergence
of Financial
and Wealth
Markets
Business Solutions
putting more control
in the hands of the
broker & advisor
Financial Services
Provider Profitability
Pressures & focus on
Wealth Management
revenue by Banks
Increased Regulation
& Convergence
between Traditional
Capital Markets &
Wealth Markets Policy
Global emergence of
Self-directed
investing as personal
financial management
channel
Upselling & Cross-
selling coupled with
efficiency gains in
large financial
services businesses
Better Informed &
demanding Clients
from Retail & Mass-
affluent to
HNW & UHNW.
Multi-channel
capabilities a reality &
demanded by
customers
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Robo-Advice & the digital channel opportunity
A Robo-Advisor is an online wealth management service that provides
automated, algorithm based portfolio management advice
without the use of a human financial planner.
6bnOnline advice
Consumers seek
financial advice online
Banking
transactionsOnline
Mobile phonesAcross the world, exceeding
the number of people in
the world
Expect customer facing staff to have a single view of them in real time70%
41% 85%
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69%
More likely to feel
confident that they
can achieve their
life goals if they
have a written plan in
place, compared to
no plan.
3x
Consumers Seek financial advice
from sources otherthan a financial adviser.
More in retirement
savings of the advised to
the non advised.173%
Global Revenue Opportunity
$175bn -
$200bn
Clients expect
• PERFORMANCE
• TRANSPARRENCY
• ENGAGEMENT
• TRUST
4x
Wealth clients have multiple
wealth management
relationships
73%
$120trillion
Global SavingsManaged by global wealth managers
Wealth clients open
to consolidation of
relationships
57%Consumers open to
switching wealth managers
for superior client experience
40%
Robo-Advice & the digital channel opportunity
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Global status of Robo-advice
United States is used as a barometer of success
of Robo-Advisors in attracting Assets under
Mngt
US Securities and Exchange Commission
reported in January 2016:
• AUM for Robo-Advisors grew by 209% year
on year from Jan 2015 to Jan 2016 totaling
$11,743bn
Whilst these are material nominal AUM, it
represents less than 0.25% of the Private
Financial Wealth in North America.
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Robo-advice in South Africa
• Mixed views:
• Replacing advisers across a large
number of financial services offered
• An opportunity for advisers to better
engage with clients and to make their
businesses more efficient
• Robo-Advisors are expected to:
• Encourage new entrants to wealth
management
• Drive down costs of investing funds
• Unlock new client segments
• Attract younger, technically proficient
clients
• Encourage self help, anytime,
anywhere
• Enable client service in underserviced
markets
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Investment into Wealth Management
• The Boston Consulting Group Survey 2015, examined the total investment allocation by
wealth management institutions and focused on the following two specific categories:
• Investment to enhance existing business, and
• Expanding into new frontiers
• Priorities identified were:
1. Improve sales force effectiveness 2. Enhance digital interfaces
3. Develop a digital advisor channel 4. Develop new client segments
The overall emergent investment theme seeks to
enhance the overall customer experience and
improve business efficiency whilst enhancing and
supporting human sales channels.
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Robo-advice business model
• Business Model
• Robo-Advisor should compliment existing distribution
strategies
• Appeals to a broad range of clients & potential clients
through effective segmentation
• Making money
• Attracting funds under management
• Technology driven so low cost service model
• Ease of use & value - attracts clients back, & easy
referrals
• Typically low value accounts – scale & volume required
• Independence
• Product Providers will be quick to offer Robo solutions,
in order to grow AUM, obviously this route will imply a
loss of independence for advisers tied to the platform
• Advisers can retain independence by setting up their
own Robo solution
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Multiple Stakeholder Perspectives
Business Regulation
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Regulatory Environment Context
Client Expectation
Regulatory Responsibility
Organisational Authority
Business Mandate
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Business Environment Context
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Client Personal Finance Context
Life
sty
le &
E
nte
rta
inm
ent
Com
mu
nic
atio
n
Pri
ma
ry B
an
kin
g
Ris
k P
rod
ucts
Insu
ran
ce
Pro
du
cts
Me
dic
al C
are
Fo
od
& H
ou
sin
g
Ed
uca
tio
n
So
cia
l B
urd
en
Sa
vin
g &
In
ve
stm
en
t
“My Wallet”
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Multi-Channel Financial Services
Full Service Self Service
Internet
banking
PFM
Online
Trading
Self
Directed
Direct to
Client
Automated
Advice
Guided
Scaled
Automated
Call Centre
Scaled
Advised
Limited
Face2Face
Advice
Holistic
Full
Service
Face2Face
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Technology Facilitated Process
Enabler
Single Client Data Store ● Advice Congruence ● Unified Regulatory Compliance
● Data Workflow ● Calculation Consistency ● Usability ● Mobility ● Security
Multi-Channel
Multi-Platform
Multi-level Compliance
Tightly Coupled & Interconnected
External Data
Integration
Fulfilment &
Execution
Product Vendor
Systems
Integration
Product Vendor
Data Integration
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Omni-Channel Financial Services
Full Service Self Service
Internet
banking
PFM
Online
Trading
Self
Directed
Direct to
Client
Automated
Advice
Guided
Scaled
Automated
Call Centre
Scaled
Advised
Limited
Face2Face
Advice
Holistic
Full
Service
Face2Face
Financial Advice Platform ArchitectureSingle Client Data Store ● Advice Congruence ● Unified Regulatory Compliance ● Data Workflow ●
Calculation Consistency ● Usability ● Mobility ● Security
Financial Institution Backend systems
Financial Advice PlatformWorkbench configured specific to advice channel.
Financial Institution Client Platform
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Robo-advisor friend
Robo-Advice should not be
viewed as an adversary or
alternative to traditional advice
models,
but rather an opportunity for
advisors to grow and scale
their business as part of a
multi-advice, multi-channel
proposition
Thank you
iress.com
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